Lead with your Heart when Layoffs are Necessary
The challenges that the COVID-19 pandemic is presenting to businesses today are myriad. Among the most heartbreaking for Evergreen® leaders is the necessity, in some cases, of carrying out layoffs. For many leaders, this will be the first time they have had to lay off employees, and it’s hard to reconcile this move with People First principles. When you love your people, letting them go is an excruciating experience.
Even for those leaders who may have guided a company through layoffs in a previous downturn, it’s important to acknowledge that this is a unique situation. This could go on for a long time. People are dying. Your employees today are not only worried about losing their jobs, they are worried about their health and the health of their loved ones. It’s personal. It’s emotional. It’s uncharted territory no matter your tenure as a leader.
Against this backdrop, there is no denying the pain of telling a team member that the company can no longer support their position. Anybody who says they have a pain-free way of doing layoffs doesn't care about people. That said, there are steps you can take to approach this difficult task in a way that prioritizes the well-being of employees and aligns with the philosophy of servant leadership.
Be Transparent: Communicate Early and Often
I operate under the philosophy that, "Only the truth sounds like the truth." The best thing you can do is to be open and honest about what's going on in the company, as soon as possible, so that there aren't surprises. Your team deserves to see the real picture. You need to be as authentic and as vulnerable as possible.
Share the financial state of the company in the current situation and all the factors at play for your business and acknowledge the universal uncertainty and fear in this moment: “You know, we're all afraid. We'll do the best we can. We're in it together. We won't keep any secrets."
Be the First One to Take the Pain
Expect that you're going to have some pain in this downturn. Nobody's going to escape the impact of this deal. The people who work with you—your employees, your partners, your associates, and you will feel it in one way or another.
In this scenario, if the unique circumstances of your business require you to take cost cutting measures that affect your people, whether that means freezing salaries or retirement matching, reducing pay, or more extensive cuts through furloughs or layoffs, you have to be the first one to step up and take the pain. You need to share with your team how you will take the hit. Your people have to know that you're putting yourself up first.
Be Efficient
If layoffs are a necessary piece your cost cutting plan, be sure to plan the communication and the practical steps of this process carefully to ensure it is as efficient and as humane as possible.
The communication around layoffs should begin as early as possible, through the transparent sharing of your financial situation. Go in with a plan: tell your people exactly what's going on and that there are going to have to be some layoffs, why this is necessary, that it’s not their fault, and that you’ll do everything possible to help them.
If you don’t have a clear timeline for announcing layoffs, at least provide a date that you will be able to share that information: “Here is when everyone will know if and how many layoffs we will need to make.” You can’t stretch this process out. It’s agonizing for your team. Once you have committed to making layoffs, the action itself needs to be taken within two-to-three days.
Do all within your power to only carry out one round of layoffs. Multiple rounds of layoffs are incredibly harmful to morale and to your team’s belief in your word. If you've got to cut, go as deep as you need to on the first round. Once complete, the people who remain know where they are and can move ahead with confidence.
Be as Generous as Possible
I have always believed that you should treat people even better going out of the company than you did bringing them into the company. That means providing as much severance as possible and, after you have completed a layoff, making a personal call to each employee who has lost a job. Find out how they’re doing; make sure you can help in any way possible. Remember that, especially in this current situation, people need emotional as well as financial support.
Empower Your Remaining Team
In the wake of a layoff, open, authentic communication is again essential because those who remain will still be fearful. They will continue to worry about their jobs, their health, and their families. Offer reassurance and calm and continue to be transparent: "Here's where we are. Here's what we're going do to try to get out of this. Here's why the decisions we're making will help to save the company."
Remember: It’s Not about You
As a leader charged with making these decisions, you will feel the pain of layoffs deeply. But remember, this is bigger than you; this is about the survival of an organization. These are the necessary steps to protect the jobs you can and guide the company to emerge from this so that you can welcome employees back. The thing that will define you as a People First leader in this crisis is the absolute understanding that your role is one of service—to the company and your team.
At the end of the day, the fact is that layoffs, no matter how well planned and executed, will be painful. But if you can do all within your power to act honorably, generously, and authentically—with love in your heart—you will be carrying out a People First process.
Howard Behar is the former President of Starbucks International and served on the Starbucks Board of Directors for twelve years before retiring. Howard currently serves on the boards of several for-profit and non-profit organizations and is also a Tugboat Institute Fellow.
Evergreen Leaders Focus on Humanity and Connection in Today’s Remote-work Landscape
The social distancing and quarantine restrictions of this unique moment in time have created a new normal for many businesses, as teams have shifted to remote work. Remote work looks different across industries and companies, but a recent Tugboat Seminar on the topic revealed that Evergreen® leaders share essential core beliefs about how to approach remote work for the health and well-being of their people and their businesses.
Acknowledge and Adapt to the New Normal
“The world—and the world of work—is different today, and to pretend it isn’t would be a mistake,” says Steve Shifman, President and CEO of Michelman, a global developer and manufacturer of environmentally friendly advanced materials for industry. “At Michelman, the work itself goes on, but our associates need a different kind of support. The challenges for us aren’t in maintaining the business, but in maintaining humanity.”
“We have a phenomenal culture based on values, including collaboration, respect, and integrity, and we are focused on supporting the connections that are so vital between people during this time,” Steve says.
“We have had a largely distributed team from the beginning—for 18 years now—and we’ve gotten pretty good about communicating and staying in touch, but we found it surprising how much changed and how rapidly in the wake of the COVID pandemic,” says Ben MacAskill, COO and President of online image sharing and hosting company SmugMug+Flickr.
With homeschooling in effect and with partners and roommates sharing workspaces, the remote setting has changed. To accommodate some of those changes, Ben says, “We’ve acknowledged the new reality and have normalized and encouraged the presence of family, kids, and pets. We are making a point of greeting family who make an appearance on video conferences and making it clear that’s ok and, in fact, welcomed.”
The company has also embraced new flexibility in team members’ daily schedules. “We have always offered unlimited vacation, but what we’re finding now is that people don’t want days off but rather a few hours within a day for homeschooling or to care for a parent,” Ben says. “Accommodating these requests allows work to continue and family needs to be met.”
In addition, he notes, “We’ve done away with a lot of the ‘pretending,’ that goes on in video meetings and remote work. We’re saying outright that it’s ok not to have your hair and makeup done, that you can come to the meeting in pajamas. That change has been pretty great, and I think we will maintain that approach after we resume ‘normal’ remote work.”
Recognizing the novelty of this time and place and being flexible have also guided Michelman’s response. Steve says, “We have associates juggling young children when both parents are working at home, some with teenagers at home, and some caring for parents. All of us are facing this remote work scenario differently. For those of us in leadership, the challenge is to recognize that everyone has a different situation and to do what we can to allow them to bring their whole selves to remote work—that might be bringing a kid on their lap for a conference call or wearing pajamas.”
Working to dispel the expectation of perfection at such a stressful time is also a goal at home décor and consumer products company Balsam Brands. “There is no doubt that working from home while homeschooling is challenging,” says Claire Magat, EVP of People and Growth at Balsam. “We are hearing from parents that they are feeling pressure. We are working to assure them that they don’t need to be perfect—we are naming the challenges and brainstorming solutions: shifting schedules, swapping responsibilities, and moving people to part time temporarily when that’s an option.”
Support Mental Health
Efforts to alleviate anxiety stemming from the added pressures people are feeling while working at home are part of a more-broad plan to support employees’ mental health among Evergreen companies.
“The number one thing we are focused on is supporting the wellness of our team members and especially their mental health,” Claire says. “Let’s face it: this is a scary time from a health and economic standpoint, and our teammates are feeling it. They are concerned for their health and the health of their loved ones and about their financial livelihood.” The isolation made necessary by new social distancing restrictions adds to anxiety for many, especially for extroverts, she notes.
“There’s not much we can do to provide certainty, which is hard, but we can take steps to support mental health,” Claire says. “We’re reaching out to individuals each and every day, listening, and meeting as many needs as possible. We’ve secured mental health resources for those who need them, including connections with virtual therapist and apps and other accessible tools.” Overall, she adds, “we’re making a concerted effort to destigmatize mental health challenges.”
Being open with employees about mental health and providing a range of benefits that address the issue is essential, agrees Everett Harper, CEO and Founder of software development company Truss. “Just normalizing and talking about mental health struggles is often the most profound thing you can do. When I have been open about my own experiences, I have been amazed at how many people reach out to learn more.”
Connect Often to Maintain and Grow Company Culture
Despite the years of experience supporting a remote team, Ben says that the current period of challenge has highlighted the importance of personal connections. “Our managers check in with or send a message to their direct reports daily now—not to ask, ‘are you getting your work done?’ but to ask, ‘How are you doing?’ on a personal level.” In addition to these one-on-one interactions, he notes, they have created opportunities for “scheduled spontaneity”—surprise virtual birthday parties, online karaoke, and virtual “water cooler” chats among the recent offerings, all with the intention of building community and connection.
At Michelman, Steve says, similar efforts to connect people and build on the foundation of culture are underway. “We’re keeping up the normalcy of company traditions where possible, with virtual tweaks. For instance, I have always hosted weekly “chow and chat” lunch meetings when I travel to our locations, and I’ve carried on with that now virtually. Last week I sent pizzas to 200 associates around the U.S., and people dialed in for the lunch.”
Everett says that Slack has been valuable in maintaining connections between remote team members at Truss, specifically the Donut app, which helps introduce employees who may not know one another and provide the opportunity for virtual coffee breaks and meet ups.
We’re All in this Together
As all four Tugboat Institute members who shared insights into remote work made clear, there’s no question of the challenge of this period and the personal anxiety of team members. But, in the face of these hurdles, there is also a unique opportunity for Evergreen companies to offer a platform for connection and meaningful support.
“The potential upside of this scenario is the recognition that we’re all in this together,” Claire says. “We’re all facing disruptions, and those constraints can drive creativity and a shift in perspective.”
Ben agrees, noting “All of the changes we have made, inspired by this new reality, have been around personal connection and staying in touch with people on a human level. We wish we had done some of these things 18 years ago; I think we’ll carry many of these things forward and be a better remote company for the changes.”
Finally, says Steve, as leaders, it’s an opportunity to also express thanks and empathy. “We need to continue to recognize the great work that’s being done, stay visible, and offer up our gratitude. Our people are dealing with hardship, and we need to be calm for them. We can’t predict the future, but we know we can get through this together.”
Diana Price is Content Manager at Tugboat Institute.
Photo courtesy Balsam Brands.
Growing Our Evergreen Companies When Times Are Tough
The current health and related economic landscape are bad and are likely to get worse. For many, from CEOs to Team Members, this might be the first big downturn they’ve seen first-hand. It’s one thing to read about a downturn – it’s another to live through one.
While it might be tempting to curl up into the fetal position, we have work to do. At our company, Savage, which provides service offerings for truck, rail, and marine transportation and logistics, materials handling, and other industrial services, we’re taking steps today to weather this storm, support our people, and, grow our businesses.
Step 1 – Preserve the Cash
This situation requires a laser focus on preserving capital. Sadly, I’ve seen this show before – having been through a downturn about every ten years in my 40-year career. There’s one lesson I learned the hard way: “Don’t ever run out of cash.” An unprofitable company can run for years, but a company without cash doesn’t last very long. So, in a crisis, anything and everything we can do to preserve cash should be on the table. Halting capital expenditures, cutting overtime, freezing wages, eliminating new hiring, reducing travel, slowing payables, speeding receivables, etc. I’ve been through enough downturns to know that you can never cut too soon, too fast, or too deep because you'll always wish you’d done more.
This can feel counterintuitive, but it’s essential. As entrepreneurs, we tend to be optimistic, and we want to believe that we can solve any problem – that things will work out if we just work harder. That optimism is what creates success but it can also cause problems. This is a time to tap into our entrepreneurial energy and be as creative about cost-cutting as we are about everything else. And, for Evergreen companies, it’s critical that we do it all while honoring the principles and values that have made our companies unique.
That means we’re looking critically at every dollar we can cut without limiting our growth. We’ve turned off the spigot on capital expenditures, frozen all hiring, and delayed wage increases. We’re also considering voluntary, unpaid sabbaticals for those who have the financial freedom to take a 90- or 120-day leave, and we have a list of very specific actions we can take depending on the depth, duration, and impact the downturn has on our Customers. We’ll continue to dig deep and evaluate every opportunity to preserve capital and provide this vital cushion as the downturn progresses.
Step 2 – Change your Team’s Mindset
All the cost-cutting and cash-preservation actions will send fear throughout an organization. So this next part becomes even harder. Now we have to shift our teams to thinking about growth. In 2008, when the economy was in free-fall, our company actually grew. Think about that for a minute – if you remember 2008, it’s pretty amazing. Our team did it by changing the focus from the terrible things that had happened, or that people were afraid were going to happen, to how we could tap into the needs of our Customers and solve their problems.
It’s easy for fear to cloud the vision and stall objectives in a scenario like the one we’re facing today. We know that mitigating fear—of the personal health risk and the financial impact—by providing information and reassurance is a powerful first step.
We held a company-wide virtual town hall meeting to share facts and statistics about the COVID-19 pandemic, to provide information from trusted health sources, and valuable context about the impact to the economy and our company. The health information answered a lot of questions our people had and offered reassurance of all of the steps we were taking as a company to ensure their well-being.
We also offered factual and compelling information to put the current economic downturn in context and provide a sense of the bigger picture. Realizing, or being reminded, that our company actually grew in 2008 provided a different context for having the conversation about growth. Asking our Team Members to step back and consider that while it might feel like we’re getting pummeled today (because we are), when you look at the long-term picture, downturns are blips on the screen and can actually provide opportunity. That’s a critical message to propel the team to engage and refocus on the long-term horizon.
Providing information and context allows our people to see the bigger picture, so we can shift our shared mindset from reacting to a negative situation to creating a positive outcome. We can start to ask, “How can I create value for the company or create value for the customer because that's going to be better for everybody.” We can channel creative energy to ideas and solutions that will add value instead of wasting time on worry and fear.
It’s not our job as leaders to offer platitudes in situations like this. Instead, it’s the time to put our teams to work solving problems – doing what they do best.
Step 3: Create Opportunities for Growth
This shift in mindset helps us look at the current situation and ask important questions that’ll help us not only survive this challenge but grow into the future:
- What obstacles/issues are our Customers facing?
- How can we help our Customers manage their slow-downs?
- What new opportunities does this situation create?
- How can we lock in Customers in now for long periods?
- Would it be better for us to partner with someone?
- How do we leverage our infrastructure costs to support a larger combined business
- Are there new opportunities to make acquisitions?
You don’t have to look far to see examples of innovation driven by our current situation:
- Yoga studios offering virtual classes;
- Restaurants providing curbside/delivery service;
- Health clubs extending favorable extension terms for members who continue to pay monthly fees even when they can’t use what they’re paying for;
- Wineries holding online tastings.
For us, the best example is a service that we’ve offered for years, for decontaminating facilities after a spill or release of a toxic substance. It works extremely well for sanitizing and decontaminating locations. We’ve branded it “SafeSite,” and we’re seeing incredible demand from Customers who want us to help make their facilities clean and safe from the spread of the Coronavirus.
This is the time to think about our Customers and what they're struggling with, and we’re asking our people to help us figure it out. The reality is that despite the hardship of a downturn, Customers are often much more open to different and creative solutions during these periods, and that offers us an opportunity to step in and provide solutions that can lead to long-term projects and partnerships that create lasting value. Even ideas that have been proposed in the past, can have a new life when Customers are much more open-minded about finding ways to solve their problems.
As we continue to engage our Team Members, help our Customers, and evaluate choices we make to sustain the long-term health of our company, we know we’re not immune to the impact of the challenges of this time. This will affect all of us. But I know that if we can embrace a proactive, creative mindset, we will emerge stronger as a company. We’re creating resilience as we persevere through this downturn, as we have through those that have come before. As is frequently the case, Warren Buffett said it best:
“Every decade or so, dark clouds will fill the economic skies, and they will briefly rain gold. When downpours of that sort occur, it’s imperative that we rush outdoors carrying washtubs, not teaspoons. And that we will do.” - Warren Buffett (2016 Annual Letter)
Kirk Aubry is President and CEO of Savage.
Creativity in This Time of Crisis
Artist Phil Hansen has presented at three Tugboat Institute events—first at our inaugural Tugboat Institute Summit in Sun Valley, Idaho in 2013 and, most recently, at the inaugural Gathering of Teams in Dallas in 2020. While Phil is an artist, his message of constraints driving creativity is an important message for all business leaders, but particularly in our current time.
As we all face new limitations imposed by the current health crisis and resulting economic shock, we thought Phil’s message would be an especially relevant reminder to, as he recommends, “seize the limitation.” When we can do that—change our beliefs about what’s possible—Phil notes, we can transform our lives and our businesses.
In his original 2013 TED talk, "Embrace the Shake," Phil shares the story of his return to art after a health setback, and the revelation that not only could he still make art, what he had perceived as a personal limitation in fact drove an explosion of creativity, as he learned new ways to express himself within the constraints of his disability. We hope his message inspires you and your team to attempt new, creative approaches during these uncertain times.
Learn more about Phil Hansen here.
Taking the Fear Out of the Workplace
Fear. Uncertainty. A growing sense of panic every time the president delivers a national address filled with increasingly bad news. Even with interest rates at essentially zero percent, the stock market (and 401(k) balances) continues to tumble. Chatter around the workplace is filled with questions like: Should I get married? Can I afford to pay my rent? Will I get sick? Will I have a job tomorrow?
Sound familiar?
As scary as things may seem today as we confront the impact of the Coronavirus, we’ve lived through this eerily similar economic horror movie before—four times, in fact. We actually bought our business, Springfield Remanufacturing Corp. (SRC), in the wake of the 1983 recession. Since that time, we have navigated each period of challenge through a system of open-book management we developed to empower employees with financial literacy—The Great Game of Business.
The power of the principles of that system was reinforced after the 2008 recession hit. It was the result of a so-called “black swan”—an economic wreaking ball that no one saw coming, not unlike the coronavirus. In that case, it was the collapse of the U.S. real estate market.
Now, more than ten years later, I can tell you that it’s never fun to go through a downturn—but we are a stronger company because of each one we’ve been through. Now here we are, facing yet another crisis—one with so many unknown variables yet to play out. But we’ll use the same Great Game playbook we’ve relied on in the past to alleviate the fear that is rising up again.
Here are four steps we’re taking today, which may benefit your Evergreen® company as well:
1. Embrace Transparency
Understand that your people are afraid. You can help alleviate that fear by openly sharing the current finances and the conditions the business is facing. This founding principle of open-book management will empower your employees and bond your team as you tackle the challenge of this time together. If you can share the current reality and say, “here is the worst-case scenario—now that you know what that is, let’s move backward and put plans together to get through this,” your team will be inspired to help.
As you think how to navigate, recognize that you don’t have all the answers, and be open to the ideas and creativity of your team. Not tapping into the wisdom of your people means potentially missing great ideas and the opportunity to develop solutions together.
What has always been amazing in my experience, is to see that when you have the courage to share the ugly truth, people don’t run; they are more than happy to help, and they want to contribute. I have never seen our people come together more than during a recession. Don’t let this crisis go to waste. There’s a lot to be gained by building bonds through transparency.
2. Talk about Your Cash
Today’s motto should not be “watch your cash.” It should be: “Talk openly about your cash position, about how much debt you have, and how long it can last.” If you can teach people how much is left in the bucket of cash, they are the ones who can best extend it to sustain the health of the business.
Similarly, I recognize that some of you may find yourselves in an overleveraged position. But that is an opportunity to engage your workforce and tell them the truth about the situation. If you do find yourself in trouble, ask your associates for ideas about how they can contribute to cutting costs—and increasing cash flow to the point where you can actually cover your debt obligations. Your people are the ones buying the office supplies, converting inventories to cash, selling online, and coming up with other innovative practices that will make a difference. The creativity and ideas that I see when people open their books is incredible. People actually develop new businesses within existing businesses with and without money; they find solutions where you’d never expect. You’ll be amazed what can happen when you teach your people the rules of the game—and start keeping score.
Right now, banks around the country are deciding what industries are going to survive—which businesses they will lend to and which won’t make the cut. That’s really scary. We saw this happen in 2009. With that experience in mind and despite how liquid we are today, and with a strong balance sheet, we went ahead and drew down a $10 million line-of-credit last week as an additional safety measure. As you consider the steps you will take to help ensure the cash health of your company, you might think about drawing on existing lines of credit now while there is still money available.
3. Protect Jobs
If you’re like us, you’ve been fighting tooth and nail over the past few years to attract—and retain—people in the middle of the “War for Talent.” We don’t have a future without people.
I’ll never forget the night in June 1980, when I turned on the TV to watch the evening news. It haunts me to this day. We were smack in the middle of a nasty recession, and the news was usually grim, especially in the Rust Belt where I lived and worked. Factories were closing left and right; thousands of people were losing their jobs on a daily basis. Unemployment was soaring, along with interest rates that topped 18 percent. Executives became idols as downsizing jobs became the new mantra, laying off people at a time they needed those jobs the most. Something similar could happen today.
I attended a conference last summer in Silicon Valley with a number of business leaders, and my biggest takeaway was that the minute they run into trouble, they will go back to their old ways, and downsize, instead of figuring out how to protect jobs. I caution you to think differently.
There is no future without people. We are doing scenario planning on how far we can go without any revenues, e.g. the government shuts down our factories. We look at how much longer we can go if top people take less pay. We look at how far we can go if everyone takes a pay cut—measuring days, weeks, and months. It’s my belief that whoever has the most talented workforce will dominate their markets as soon as 2021. We will avoid layoffs at all costs so that we will have the people when this thing turns.
4. Get Ready for the Upturn
You have to recognize that there will be an upturn and do what you can now to prepare. As bad and as uncertain as things look today, I have a secret to share with you: it’s actually harder to get a company ready to take advantage of an upturn than it is to prepare for a downturn!
Downturns can actually be opportunities to fix things inside your business that you can’t afford to invest the time and resources in when the economy is booming. While it might seem counterintuitive, the current down market comes as a kind of short-term relief. It’s giving us a chance to catch up—to make investments in our people and facilities—and to prepare ourselves to capitalize on the economic uptick that we expect to hit in late-2020, early-2021. By then, our workforce should be more stable and productive—and ready to take full advantage of the available opportunities.
Today, as we face the reality of quarantines or shorter work weeks, we’re thinking creatively about how to invest in our people. If they have to be at home, they can be learning about financial literacy or gaining other new skills. When they come back, they will have even more to contribute to the team. We are consistently thinking about how to maximize people’s time and learning in this challenging time.
I know how painful things are today—I feel it, too. The health and safety of our associates is our highest priority. But there’s no reason you can’t also dare to be successful. Embracing transparency, practicing financial discipline, trusting and respecting your people, and remaining forward focused are all steps you can take to alleviate fear and stress in your workplace today and prepare for the future.
Jack Stack is President and CEO of SRC Holdings, Corp.
The Trust-Leadership Connection
Tugboat Institute member Penny Pennington was appointed Managing Partner at Edward Jones—the sixth in its 97-year history—in 2019. Edward Jones has over 43,000 associates and 7 million clients who trust Edward Jones to help them achieve their financial goals—the company is Evergreen through and through.
In this presentation from Tugboat Institute Summit 2019, Penny shares her insight into the fundamental importance of building and maintaining trust in Evergreen businesses—with employees and with customers.
How a Stanford Visit Led to A New Business Innovation in Chile
Education has always been a priority for our Chilean-American family. My father and his four siblings, raised on the family farm in the Casablanca Valley in Chile, were sent north to attend college in the U.S. My two brothers and I all earned MBAs, as my father had, and I always loved school and the challenge and stimulation of academia.
Given the draw of education, it’s maybe not surprising that a significant Pragmatic Innovation in our Evergreen® business, Kingston Family Vineyards, has an academic focus.
Founded in 1922 by my great grandparents Carl John and Caroline Kingston, our farm was primarily run as a dairy and beef cattle operation for two generations. In 1998, we planted grapevines to provide an alternative source of revenue to the commodity boom-bust cycle. In the 20 years since, we have developed the vineyard and the winemaking operation to create world-class wines, host wine-based experiences, and, more recently, welcome academic travel groups.
Our pursuit of the academic travel business began back in the early 2000s. Adventure travel to Chile was just starting to grow at the time, and alumni travel groups were at the forefront of that trend. Noticing the interest in our part of the world, I decided to see if I could tap into the trend and fit Kingston into group itineraries. My first foray was in my own backyard. Stanford University has one of the biggest university travel programs in the country, so I leveraged the fact that I was an alum of Stanford’s Graduate School of Business (GSB)—and had served as an alumni wine judge in the university’s alumni wine program—and was living nearby in Portola Valley to get to know the team planning the university’s trips to Patagonia and Antarctica.
Persistent networking and a long sales cycle paid off when, in 2009, Stanford brought a group of 21 alumni to the farm as part of an extended Chilean visit. Nineteen of the 21 Stanford visitors joined our newly formed wine club, and I realized we may have just hit on a new target market. I began to reach out to other university and alumni travel programs to test the idea with them. Pretty soon, largely through word-of-mouth, we were regularly hosting visitors from colleges and universities around the U.S. We had a new, profitable business line.
In 2015, the opportunity developed even further when Stanford’s GSB approached us with a request. They wanted us to be the subject of a MBA case study on the changing landscape of wine production, export, and tourism in Chile.
I was excited about the prospect of opening our business to academic analysis and learning from the research. Having been flying the plane, so to speak, for years in my leadership role in the business, the prospect of stepping back and studying the plane was intriguing.
While we acknowledged the vulnerability inherent in allowing access to private financial and operational details, our family ultimately agreed. I knew that we could learn valuable insights, and that we would be challenged in ways that would help us grow the business. And, it just felt right—probably not surprising given we’re a family of MBAs who like to geek-out over margins and engage in continual dialogue around the business.
The result of that leap to open up and be vulnerable as a family and as an Evergreen business continues to offer rich rewards today. The first case study, published in 2016, has resulted in a new series of academic visits by MBA programs. We have cultivated this new audience by partnering with several significant travel operators that design and operate itineraries for business school professors and deans seeking to plan overseas trips for their students focused on global management. We have also cultivated direct relationships with faculty and deans in top U.S. executive/business programs to seed client relationships
Today, 20 percent of our guests are connected to educational travel/MBA/eMBA programs, visiting to study our business. These visits have created a new market for our business focused on developing food and wine experiences for larger groups, and the success of this segment allowed us to take the plunge to build a new private event center and professional kitchen that will allow for further growth. And we feel great about the potential for expansion in this aspect of our business.
Beyond the measurable growth we’ve seen, the visits have had an unexpected benefit. Our Chilean and American team members, who all participate in hosting these groups, take part in fireside chats about our successes and our challenges. The level of discussion transports our team from focusing solely on the urgent and tactical to also embrace a strategic perspective on a weekly basis.
While continually opening yourself up to questions and analysis can be difficult— these are smart, experienced executives, and they can ask probing and sometimes uncomfortable questions—the result is deeper knowledge of self and team, and new inspiration and growth for our Evergreen business.
Courtney Kingston is Founder and CEO of Kingston Family Vineyards.
The New Normal
Doug Tatum is a Professor at Florida State University and a student of business. He’s an expert, specifically, in the area of scaling small businesses through a challenging period termed “No Man’s Land,” during which a leader can do what appears right and still see their business fail.
In this presentation from Tugboat Institute Summit 2019, Doug shares insights into how Evergreen leaders can strategize to successfully navigate this potentially treacherous period—and emerge to thrive.
Distilling the Lessons of a 100-Year-Old Family Business into a New Pursuit
I grew up working in our fifth-generation, Pacific Northwest-based family business. I spent my summers working on our legacy timberlands and for our beer and wine distributorship. During those early years, I recognized the importance of working hard and following your dreams.
After I graduated from college, I went to work for our beer and wine distribution business for a year before working for our investment company, managing our commercial real estate and timberlands portfolio. I have served in several additional roles for the family business, including board member for our investment company, family council chair, and, currently, as annual shareholder meeting chair. At the end of 2014, I made the decision to leave the family business. I was ready to venture out and create my own successes and failures and to build something myself. It was time.
In 2015, I partnered with my brother-in-law to start Pursuit Distilling Company. We are a 100 percent grain-to-glass distillery located in Enumclaw, Washington. We produce several brands of spirits, including Suspect flavored whiskey, vodka, gin, single malts, whiskey, and bourbon. We are currently distributed throughout Washington State and Oregon.
We’re a start-up company, and every day there’s a new mountain to climb, but our roots run deep. We are continually innovating and thinking creatively to differentiate our brand in this competitive marketplace. As we move ahead to leave our own legacy, our company reflects the lessons, values and long-term timeline I learned as a fourth-generation steward of a family business.
Hard Work
My great-grandfather was a pioneer in the timber industry. He was known to travel up and down the I-5 corridor visiting his current timber holdings and scouting out new timber tracks. He would pack sack lunches for the entire week on the road and would fill gas cans from his logging mill sites, storing the gas cans in the back of his car as he drove (safety priorities were clearly a bit different in those days). He was a frugal man and valued saving pennies where he could. His hard work, his pioneer spirit, and his work ethic have been the foundation of our family enterprise for almost 100 years.
That work ethic was ingrained early in our family, so I’ve never been afraid of hard work. That’s a good thing because there are no shortcuts in owning and operating a start-up company. I recently joked with someone that, in retrospect, the 50-60-hour work weeks I spent working for my family enterprise were a breeze compared to my current reality. Those days are gone. I work pretty much every day, and every day brings a new challenge. It’s a crazy ride, but I am excited and blessed to be on this road.
I currently manage marketing, sales, legal, distribution agreements, payroll, accounting, and, until recently, HR for Pursuit. I'm kind of the quarterback who just keeps the team moving down the field. Wearing a lot of hats has been a challenge, but growing up in the family business, I learned early the value of hard work. If there were a ditch-digging competition to see who could dig the most ditches in an hour or the entire day, I believe I would win. I just would never quit digging, and I would do it with a smile on my face.
Long-term Planning Horizons
We founded Pursuit Distilling with a 50-year business plan. I was 35 when we started the company, and I hope to be around at 85 knowing that my business will be, too. We’re in it for the long haul.
And it’s a good thing we are because distilling and aging spirits takes time and patience. Spirits have to sit in a barrel for at least four years to have any kind of credibility in the marketplace. That time in the barrel confers the Bottled-in-Bond designation, which can offer a rewarding payoff. For example, a 53-gallon New American Oak barrel of spirits costs us about $1k to produce. This cost includes the barrel, distillate inside the barrel, labor, glass, taxes, and a few other initial costs. After four years, that barrel—depending on quality and price point—is worth between $10k and $12k. So, patience is the key.
When you have a long-term investment horizon, you just know it will all work out. I always tell people, "Thank goodness I came from timber. Timber takes 50 years to mature and to get your return. If I can get a return back within 10 years that is a home run."
Stewardship
Though we’re a startup, we operate with a stewardship mentality. I tell our employees that everything we’re doing at Pursuit was made possible by my great-grandfather. His initial labor really provided our family the resources to allow me to go and do something that I love. It’s my responsibility to preserve that gift and carry it on to the next generation. I want my kids, who are young now, to have the opportunity to join this business—if they wish.
My ability to steward my own business relies on my connection to the key learnings of the family enterprise. I know the trove of wisdom that exists in our 100-years of business, and I capitalize on reaching out and connecting with my dad, my cousins, and my uncle for the good of my business, tapping them as resources to help navigate starting and owning the distillery.
These deep connections have been so rewarding as I forge my own path. My family members are my biggest cheerleaders. Their support is essential in the daily grind of startup life because there is no question that it’s easy to feel beaten down in the relentless pace of launching a new business. When a family member reaches out to me and is fired up because they’ve seen our product on a shelf somewhere, or because they have enjoyed a delicious cocktail from an establishment using our products, that brings a huge smile to my face.
Looking Back Encourages Me to Look Ahead
I know that all the lessons of the years I spent deeply involved in leading our family enterprise will continue to help shape my own business. It was a leap to step out on my own, but I did so from a very solid foundation.
My goal for Pursuit Distilling is lofty. I want Pursuit to be a world-class distillery, creating products that are shared around the world. It might sound crazy, but with a 50-year planning horizon, I’d like to think we can get there.
I also hope that Pursuit will continue to provide good jobs for people and making an impact in our communities for years to come. One thing I've always appreciated about coming from a family business is the honor that exists in taking care of families. We feel lucky to be able to provide our employees with a career and benefits, and we take that responsibility seriously. My hope is that in 50 years, I’ll be able to look out and see faces of people who have been with us for decades. That would be a dream.
I know it will take much more hard work to realize my hopes for our company, but that doesn’t scare me. I’m fueled by passion for this venture and by the deep sense of hospitality that really underlies this company. Sharing a great beverage, in my mind, is really about coming together, and I want everyone who enters our tasting rooms, drinks our products, or engages with us in any way, to feel that sense of hospitality that grounds us.
Sam Agnew is CEO and Owner of Pursuit Distilling Company.
Thirty Years of Living the Evergreen 7Ps
Wynne Odell and her husband, Doug, founded Odell Brewing in Fort Collins, Colorado in 1989. In the three decades since, the company has persevered and grown, aligned with the Evergreen 7Ps™. In this presentation from Tugboat Institute Summit 2019, Wynne shares stories of challenge and success, offering an authentic and inspiring story of Evergreen business.